Consumer Demand for Sustainable Products in Asia: Successes and challengesSeptember 21, 2021

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Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Global Consumption Trends: VSS-compliant products

Findings from IISD’s commodity series reports: “Sustainable Commodity Marketplace Series 2019” (iisd.org/ssi/market-coverage/); ITC's State of Sustainable Markets 2020/2021; and ongoing research on consumer preferences in emerging economies 2021

Since 2018, trends show an increase in global consumption of VSS-compliant products being the major drivers of growth:

• End-consumer preferences for more healthy and sustainable products

• Business demand: Market demand; reputational and supply risks; due diligence mechanisms; reporting commitments/practices

• Regulatory frameworks and export promotion measures in producing and consuming countries (e.g., EU-RED for palm oil; BCI in Mozambique); VSSs as proof of compliance

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

COVID-19 Effects on VSS-Compliant ConsumptionGlobal demand for VSS-compliant products

• Production and consumption patterns have been impacted by the pandemic, as global disposable incomes decreased by 5% in 2020. Many households continue to reduce spending on non-essential products and services, which can include VSS-compliant products.

• However, there is a growing demand for more nutritious, healthier, and safer products that protect the environment and animal and human welfare. VSSs can act as a tool for actors in supply chains to assure consumers and governments that they comply with safety, quality, and environmental safeguarding.

• These trends vary by regions and commodity sectors.

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Global Consumption Trends: VSS-compliant productsDifferences by regions and commodity sectors

Traditional markets (Europe and North-America) drive consumption of VSS-compliant products

• This benefits commodities that are largely consumed in these markets: “Pull effect”

• Cocoa, cotton, coffee, and bananas

However, overall, emerging and developing countries, particularly in Asia, are the largest consumers of some of these commodities: Tea, bananas, soybean, palm oil, sugarcane

• Initial/emerging consumption of VSS-compliant commodities in some countries (middle-income class; disposable incomes, health concerns)

• However, consumption of VSS-compliant commodities remains low

Price sensitivity Lack of awareness of consumers, buyers, and manufacturers on sustainable issues in value chains Hidden commodities (soybean, palm oil, sugar)

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Coffee: VSS-compliant consumption trendsSome key facts...

VSS-compliant consumption:

• Europe and North America still dominate the demand for VSS-compliant coffee

• However, the higher rate of growth of coffee consumption in Asia can offer potential to increase VSS-compliant coffee consumption and balance the existing oversupply for VSS-compliant coffee

• This could be very promising, as 67-80% of coffee is produced by small-scale farmers in developing countries-including farmers in countries such as Vietnam, Indonesia, and Thailand

Increase potential in Asia:

• Countries: China, Indonesia, Vietnam (younger population, higher disposable incomes and emergence of coffee shops)

• New markets: Retail options, RTD coffee and e-commerce has gained momentum in the region

• Initiatives are emerging to boost local consumption for more sustainable coffee (institutional or by the private sector, e.g., SCOPI - Indonesia)

• Buyers, roasters and traders: There is still room for growth - buy and offer more sustainable coffee; accountability with their sustainable sourcing commitments

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Tea: VSS-compliant consumption trendsSome key facts...

VSS-compliant consumption:

• Demand concentrated in Europe and North America; COVID-19 boost in demand for organic tea in US

• There is still potential to boost sustainable consumption, only 15% of hot beverages sold are certified

• In Asia, demand for VSS-compliant tea is still low as consumers prefer cheaper, conventionally grown tea in key consuming countries such as Turkey and Indonesia

• VSS-compliant tea must be affordable for local populations as well as cost-effective for tea producers

Increase potential in Asia:

• Countries: China and India are key, as they are the main producing and consuming countries. Enabling factors: demographic growth, faster urbanization, and rising incomes (FAO, 2019)

• Development of local sustainability schemes: Trustea in India and Lestari in Indonesia can help boost local consumption

• Tea companies and multinationals are key to expand consumption as the sector is vertically integrated. Sourcing commitments and transparency from tea brands and multinationals also selling in the region is crucial.

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Palm Oil: VSS-compliant consumption trendsSome key facts...

VSS-compliant consumption:

• Consumers and governments are driving growth in VSS-compliant consumption to address the sector’s socio-environmental impacts

• Goods and food manufacturers are also driving demand due to reputational risk, compliance with regulations, etc.

• Demand for VSS-compliant palm oil is lower than supply and concentrated in Europe and North America

• The Asian market is key but is very fragmented and price sensitive as palm oil is critical in diets and used in everyday cooking in the region

Increase potential in Asia:

• There has been an increase of public awareness of VSSs such as RSPO in China, from 5% in 2015 to 21% in 2020; meaning there have been efforts to educate the population in the region on the sustainability issues in the sector (also I-SPOC in India)

• Policy support in consuming and producing countries in Asia can help increase sustainable consumption, affordability, and support farmers to adopt more sustainable production practices

• Industry actors must play a role, as palm oil is mainly used as an ingredient in food and cosmetic products

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Cotton: VSS-compliant consumption trendsSome key facts...

VSS-compliant consumption:

• Demand for VSS-compliant cotton has increased mainly in Europe and North America (apparel brands and textile manufacturers seeking to respond to consumer preferences)

• Globally, among VSSs in the sector, organic has registered significant growth in sales. Research suggests that demand for organic cotton will outpace supply in the coming years

• Some challenges persist to boost consumption in Asia, such as competition from cheaper synthetic fibres, fast fashion, etc.

Increase potential in Asia:

• Emerging economies: Forecast to rise consumption in sustainable apparel. Key countries: India and China (baby clothes market)

• Young shoppers in Asia are increasingly seeking sustainable brands and have expressed willingness to pay for more environmentally friendly fashion. Consumers are also making lifestyle changes since the pandemic towards more sustainable clothing shopping

• Brand commitments: Re-evaluation of sustainability practices post-covid; efforts to improve on innovation and traceability in the supply chain

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumption Trends for VSS-Compliant Products in Asia

• Limited end-consumer demand and still concentrated in traditional markets (EU and North America)

Driven by export demand

COVID-19 effects on disposable incomes in Asia

• Price sensitivity in emerging economies and developing countries

• Emergence of other sustainability initiatives (i.e. corporate schemes, due diligence requirements)

• Proliferation of VSSs (confusion among consumers)

• Lack of knowledge on the socio-economic and environmental issues in production (what is sustainable coffee; cotton, palm oil, tea?)

Limiting factors to increasing the consumption of VSS-compliant coffee, cotton, palm oil and tea in the region

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

• COVID-19 positive effects on consumer preferences (health, food safety; environmental considerations)

• Millennials: Young consumers with interest in sustainability and increasing disposable incomes in the region

• Emergence of sustainability initiatives adapted to local conditions (e.g., Trustea in India; Lestari Tea; SCOPI Indonesia)

• Policy initiatives: Education campaigns and workshops on sustainable consumption (e.g., Indonesia - technical workshops for the government and private sectors on labelling; Vietnam - VIRI)

Consumption Trends for VSS-Compliant Products in Asia

Enabling factors to increasing the consumption of VSS-compliant coffee, cotton, palm oil and tea in the region

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Going Forward…

By incentivizing VSS-compliant consumption in the region• Education and awareness campaigns, especially

for price-sensitive products such as coffee and tea (i.e., guidelines for consumer information)

• Monetary incentives for sustainable consumption (in sectors such as palm oil)

• More ambitious sustainable sourcing of buyer's commitments and transparency

• Role of regulation? Including environmental and human rights due diligence provisions for businesses

• Boost local demand by targeting the use of VSSs by local brands (i.e., coffee roasters, food manufacturers)

How to boost sustainable consumption in Asia?

By making VSS-compliant production viable and universal• Support farmers to be commercial-ready and

certification-ready; there is a perception amongst Asian farmers about the certification process being challenging and dependent on foreign intermediaries

• Monetary incentives upon positive performance?

• Accounting the true cost of externalities and reflecting it in the price?

• To reduce the costs of certification: Recognition systems (between VSSs; or by public sector actors?) and locally defined standards

The One Planet Network: Consumer Information Programme

Founded to address SustainableDevelopment Goal 12, the One Planetnetwork is a global commitment toaccelerate the shift towards sustainableconsumption and production.

The One Planet network operates through sixprogrammes for action, one of them being theConsumer Information Programme

More information:https://www.oneplanetnetwork.org/consumer-information-scpSend an e-mail to ciscp@un.org to join our network or sign upto our newsletter!

The programme is co-led by ConsumersInternational, the German Federal Ministry for theEnvironment, Nature Conservation and NuclearSafety and the Indonesian Ministry of Environmentand Forestry

Supports the provision of credible sustainabilityinformation on goods and services

Develops effective strategies to engageconsumers in sustainable consumption

Project Example: Promoting Sustainable Consumption and Production in Sri Lanka Through Facilitating Access to Information

• Objective: Improve sustainabilityin the food and agriculture sector inSri Lanka

• Implementation: UNEP andConsumer Information Programmein collaboration with the NationalCleaner Product Centre in SriLanka

01

• Impacts and results:

02

03

A national Life Cycle Inventorydatabase development for agri-foodproducts (rice, tea and dairy)

Increased consumer awareness ofsustainable consumtion and certifiedsustainable products

Certification scheme with greenproduct criteria for selected agri-foodproducts (dairy, tea)

Sustainable Consumption and Production: Trends, Opportunities and Challenges

From awareness and information

to action

Need for transformative

socio-economic changes

Nature loss

Social equity and inclusion

Unsustainable patterns of consumption and production

Digitalization as opportunity and

challenge

Climate change Pollution

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

More Actions Toward Sustainable Coffee in Indonesia

Multi-cultural &Inclusive Coffee Economy.

190 Master Trainers (75 active)23,453 farmers (6,977 female)

13 provinces

A Multi-Stakeholder Platformfor better EconomicOpportunities.

2009 2019 2009 2019

Facts!1. Traditionally based on exports.2. Now national consumption rises to help sustainability of coffee industry.3. Potentially reduce exports.

.IMPACT..INPUT. .OUTCOME..OUTPUT.How to reduce dependency on global prices,

to build economic resilience of Indonesian coffee

Behavioral change of lifestyle affecting coffee consumption

(9% growth p.a.in 8 straight years)

Training conducted for upstream (good agriculture practices)and downstream (barista and roaster community)

- SCOPI as a national platform engagemaster trainers in NSC programs.

- More collaborations and support to strengthen the organization and execute impactful and measurable programs

.THEORY OF CHANGE.

Sustainable tea in India: Present scenario andthe pathway to the future

The trustea sustainable tea program

The case for sustainability in the Indian tea industryOverall consumption pattern and consumer behaviorInception of the trustea programUnique features and innovations that boosted the

scale upImpact on the groundPathway to the future

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Consumer Demand for Sustainable Products in Asia: Successes and challenges

September 21, 2021

Promotion of supply and demand of Eco-fair Agri-Food processing products in Vietnam

www.ecofair.vn

Funded under the EU SWITCH-Asia ProgrammeLead partner: Vietnam Rural Industries Research and Development Institute (VIRI)

Overall objectivesTo promote sustainable production and consumption of eco-fair agri-food processing products in Vietnam, to contribute to economic prosperity and poverty reduction and the development of sustainable livelihoods and a green economy for a transition toward a low-carbon, resource-efficient and circular economy in Vietnam.

Partners:• Center for Creativity and Sustainability (CCS)-• FUNZILIFE OY LTD. (FUNZI)• Vietnam Cleaner Production Center (VNCPC)

INTRODUCTION: SUSTAINABLE CONSUMPTION ONLINE COURSE

Change your consumption habits for a sustainable future

• The impacts of consumption habits on the environment

• Suggesting practical ways to reduce negative effects, such as cutting down on wastes or recognizing sustainable labels and products.

• The course has 3 topics and 41 learning cards with 6 activities.

The best practices to bring the courses to consumers include:

• Nationwide digital campaigns that target those who are living in Vietnam, especially interested in the topic.

• Frequent reliable, practical, and appealing content on the Eco-Fair Facebook page

• Compelling marketing messages with a clear set of benefits for learners

• Promotion support from relevant organizations and clubs

• Press releases to mass media that have wide coverage

• Most importantly, the courses themselves have to be useful and easy to use for learners

Demographics

• 55% of learners age 18 - 25

• 21.5% of learners age 26 - 30

• The other age groups: 36 - 55 > under 18 > over 50

• 33.5% of learners are from Ho Chi Minh city, 20.6% from Hanoi, 1.4% from Hue, and the remaining are from other cities

• 58% of learners are female and 42% are male